Failing Health Care Co-ops Will Cost Taxpayers

Consumer Operated and Oriented Plan Programs (COOPs) were really a political compromise between Members of Congress who wanted a public plan option and those who didn’t. Once the Affordable Care Act passed, COOPs had outlived their usefulness. However, they are now failing and will cost taxpayers plenty. Senior Fellow Devon Herrick testified before a congressional committee.

Table of Contents

Introduction

A surplus is political manna, enabling politicians to fund their favorite programs. Proposals offered during the presidential campaign included such noble causes as strengthening Social Security, making America debt free, improving health care, cutting taxes and providing prescription drug benefits under Medicare, to name a few. How these goals are pursued would produce markedly different fiscal results. The central issue in the debate boils down to how the Social Security surpluses are used, because how they are spent today determines the magnitude of tomorrow's surpluses.

The fundamental choice is between using the Social Security surpluses to reduce the federal debt and using them to prepay future Social Security benefits. All other policy choices derive from this choice. Thus, the bulk of our analysis deals with the choice between retiring debt and prepaying future benefits.